In the past, you could farm with just the tools in your hand. Nowadays, if you want to stay competitive, you will need to do more than that. Farmers today have to manage acres of farmland, and that is impossible with just your bare hands. An additional problem is that farm equipment can be quite expensive nowadays. With farm operations having razor-thin margins, you want to make the right choices. Here’s a quick run-through of your options and some tips on how you can make your decision.
Buying
The most obvious choice that you have is to buy your new farm equipment. When you buy, you have full ownership of the equipment. This means that you can do what you want with it. It can surprise many people, but there is much you can do with something you fully own. For one, you can easily replace it when needed.
Plus, you can use it in other ways. You can rent it out when it is standing idle at home. Another purpose for it is that you can use it as collateral for a loan since it is an expensive piece of equipment. As the owner, you will also get to use it as much as you want. There are no hour limits or additional charges if you want to go overtime with it.
The trouble with full ownership is that you also have to pay for the risks. Like cars, farm equipment depreciates over time and eventually will be lower in value than what you paid for it. Plus, you will also have to pay for its repair and upkeep.
Leasing
Leasing is partially buying and partially renting. While you pay significantly lower than market value, you will have access to the latest technology. Usually, in three to five years, you can end your lease and return the equipment and trade it in for a newer model.
The main limitation of this choice is that you don’t own the equipment. Someone else owns it and puts restrictions on your use for it. But this is also an advantage since if you don’t need it anymore, you return it instead of paying for it.
Renting
There are many farm equipment rental services out there, and this makes it a popular choice. You rent by the day or the hour, often having an operator coming with the package. You definitely do not have to pay maintenance and the like. The trouble with renting is that there might be a high demand for the equipment and you can’t fit in the schedule.
Making Your Choice
The main factor that will determine which option you should pick is your budget. If you have the money to invest and you think owning a piece of equipment can end up with a profit, then that is the choice to go with. However, for smaller farms with shallower pockets, then leasing or renting might be the better picks.
Making the right choice in your equipment options can mean profits in the long run. The options lined up above should give you an idea of what you can expect and what to expect from them. Plus, the advice on how to make your pick should be a big help when making the final decision. Remember to keep the bottom line in mind when acquiring your farm equipment.
